Netherlands Tax Change Threatens Startup Employee Benefits with Levy on Unsold Shares

2026-02-24 community

Amsterdam, Tuesday, 24 February 2026.
Dutch startups face a crisis as new 2028 tax laws will force employees to pay 36% tax on paper gains from company stock options they cannot sell. The Box 3 reform creates an unprecedented situation where startup workers may owe substantial taxes on illiquid equity compensation, potentially requiring personal loans to cover obligations.

Parliamentary Approval Triggers Industry Alarm

The Dutch Tweede Kamer approved the revised Box 3 tax regime on February 13, 2026, with 93 out of 150 MPs voting in favor of the proposal [1][2]. The legislation represents a fundamental overhaul of how the Netherlands taxes income from savings and investments, moving away from the current system that taxes people on assumed returns to one based on actual asset value increases [1]. This change was mandated after the Hoge Raad ruled in 2021 that the previous approach was unlawful [1]. However, the startup community’s concerns emerged prominently on February 23, 2026, when industry leaders warned that many fast-growing companies would unexpectedly fall outside exemptions included in the bill [3].

The Liquidity Crisis for Startup Employees

The new tax system creates acute problems for employees holding equity in young, fast-growing companies who may owe tax on sharp increases in share value even when those shares cannot be readily sold [3]. Under the 36% flat rate that will apply from January 1, 2028, shareholders may have to pay the tax out of personal savings or even take out loans to cover the bill [2][3]. Michiel Muller, co-founder of online supermarket Picnic, highlighted employee concerns, stating that international staff are questioning what this means for them, comparing the situation to previous uncertainty when the 30 percent ruling for expats was scaled back [3]. The tax burden becomes particularly problematic for early-stage employees who typically accept lower salaries in exchange for equity stakes, creating a scenario where paper gains generate real tax obligations without corresponding cash flow [3].

Broader Impact on Investment Climate

Industry experts warn that the tax changes could fundamentally alter the Netherlands’ position as a startup hub, with family offices and angel investors potentially redirecting capital elsewhere due to the annual 36% tax on paper gains of illiquid shares [4]. The concern extends beyond individual employees to the broader ecosystem, as small and medium enterprises employ 70% of the Dutch workforce and depend heavily on private capital from exactly the types of investors this law penalizes [4]. The timing of implementation creates additional uncertainty, as the new system will tax unrealized gains on stocks, bonds, ETFs, and crypto starting January 2028, while real estate remains exempt [5]. Critics point to France’s experience with wealth taxation over 20 years, which resulted in 60,000 millionaires leaving the country and approximately €200 billion in capital flight, ultimately costing France roughly twice what the tax collected before being abolished in 2018 [4].

Government Response and Future Outlook

Despite the current approval, the Dutch government has acknowledged this is not their preferred system and has committed to developing alternative approaches. A parliamentary majority has requested the government to present a plan for taxing only realized returns by Budget Day 2028 at the latest [1]. The incoming coalition government favors implementing a traditional capital gains tax from 2028, viewing the current unrealized gains tax as a temporary measure [2]. Additionally, the government has included broad startup and angel exemptions in the legislation, meaning deferral until realization for qualifying companies, though details are still being finalized [6]. The Box 3 reform is proving costly for the government, requiring not only refunds of overpaid capital gains taxes but also potentially hundreds of millions in interest payments on those repayments [1]. The cryptocurrency industry has also raised concerns through Verenigde Bitcoinbedrijven Nederland (VBNL), which called for updates to the proposed framework on February 16, 2026, arguing that the lack of carry-back loss relief could lead to disproportionate outcomes due to crypto asset volatility [7].

Bronnen

startup taxation equity compensation